Taxing times as Treasury gets tough on online VAT evaders

LAW-ABIDING online retailers in the UK could see their prices become more competitive as a new extension to the tax laws comes into force to tighten demands on overseas sellers to pay their fair share.

The rule, part of the Finance Bill expected to pass its final stage this week, will make online marketplaces equally liable for unpaid VAT by nonUK businesses selling on the platform. It will apply in cases of noncompliance where the marketplace knew (or should have known) that the business ought to be registered for VAT here.

Firms will have to display their valid numbers on the sites so their compliance and authenticity can be easily checked and make it easier for consumers to make informed choices about who they buy from.

“The measure is part of continuing Government efforts to crack down on online VAT evasion and noncompliance,” said Mel Stride, Financial Secretary to the Treasury. Further moves may also be in store to make access easier for smaller firms grappling with time-consuming regulation.

As announced in yesterday’s Spring Statement tapering the cliff-edge £85,000 VAT threshold registration could encourage growth for entrepreneurs who have little incentive to expand if they are going just above it and consequently pay more tax.

In addition, early tax bill estimations could help entrepreneurs budget more accurately and an option to settle bills in instalments would also be welcomed according to business groups. “Improving access to encourage smaller businesses is definitely a priority,” added Stride.